Monday, October 19, 2009

What I really wanted to talk about, though, was the rhetorical device of invoking a “Texas developer” as the bad guy in this scenario because it highlights some of the trouble progressive urbanists have in making our arguments. Roughly speaking, people on the political left tend to have a tribal suspicion of business people. And I’ll fully admit that I share it. At the same time, there’s a tribal admiration of the figure of the activist and the organizer. So when you see a dispute that pits a developer in a suit who’s probably a huge jackass against some community activists who probably love farmer’s markets and good music, you want to side with the activists against the jackass. But from the point of view of things progressives are actually trying to accomplish on a policy level, it’s generally desirable to build as densely as is feasible on already-developed parcels. And that’s often what jackass developers are trying to do, and it’s often what local activists are trying to block. The developers are not, of course, out to save the environment, it’s just greed.

My own feelings are equally irrational, but a bit more complex. Not surprisingly, in school, I never had much in common with the guys who became our local equivalent of Texas developers. In my twenties, I pretty much exclusively hung out with people who liked farmer's markets and "good" (i.e., indy) music. But as a result, I know the organic activist types' faults better, and they are the ones with whom I had roommate disputes, or bad breakups or who owe me money. So frankly they get on my nerves a lot more than developers, who generally seem to be doing something useful with their life. So I admit that before I am in a position to develop a rational and balanced understanding of the merits, I'm against the activists Yglesias instinctively sympathises with.

Thursday, July 23, 2009

Robin Hanson of "Overcoming Bias" thinks "signalling theory" can tell us something about the left, particularly the wealthy, "post-materialist" left.

Signalling theory arises out of a paradox of game theory. It is often in our short-term self-interest to have a reputation for not always acting in our short-term self-interest. If people think my word is my bond (i.e., I will make sacrifices to fulfill my promises), then they will enter into transactions with me that they otherwise wouldn't and I'll be better off. If people think I am vengeful (i.e., I will make sacrifices to punish those who wrong me), they will avoid harming me when they otherwise would, and so on. From an evolutionary standpoint, the future benefit of having a reputation for doing such things is the explanation for why we have apparently unself-interested emotions in the first place. The trouble is that reputations for generosity, fair-dealing, vengefulness and so on are costly to acquire. So we are built (by generations of natural selection) with an aptitude for cheating: we try to get these reputations on the cheap. These mechanisms can be unconscious, and usually are, since if you can't fool yourself you are unlikely to fool anyone else. Other people are endowed by natural selection with a motive to pierce through my signalling strategies: I'm not.

Which is where politics comes in beautifully. Political opinions, at least in bourgeois democracies, don't cost us much, if anything. But they can signal (for instance) that we deeply care about the poor, a reputation it is useful to have, without requiring charitable contributions, which can put a dint in one's lifestyle (and therefore other possible status-seeking strategies). The right sees this, if the left does not, and calls on leftists to "do good at your own expense." That's Hanson's theory anyway.

Of course, a reputation for compassion is not the only kind of reputation that can be cheaply bought with political opinions. We, especially men, want a reputation for toughness and clear-headedness. We could get this by risking our bodies, but it is more convenient to get it by advocating muscular foreign policies. The left sees this, if the right does not: hence the "chicken hawk" argument which Dick Cheney and George W. Bush never liked very much: "Prove your manliness at your own risk."

Neither critique is strictly relevant to policy questions. A social program might still do more good than it offsets in charitable donations, even if advocating it provides cheap psychological benefits, and the same is true of a military intervention. But these critiques at least have the merit of dissolving the aura of virtue (whether soft or hard) that floats around arguments for "doing something".

Which gets me to Ignatieff, and the larger tradition of Pearsonian activism he has inherited. What bugs me about him is that he employs the signalling strategies of both the domestic left AND the international right, AND then leverages the contrarianness of doing both simultaneously into a reputation for "thoughtfulness." He's strong but sensitive. That would be appealing if Canada needed a boyfriend, but not if it is seeking a mere adviser to Her Majesty on matters pertaining to the federal government.

Friday, June 19, 2009

The Supreme Court is pretty anxious about its secrets, even long ago ones.

The Globe and Mail reports that the Court has sent out an e-mail threatening its former clerks with legal action if they talk to a social scientist doing an institutional study of how the court works. The study would have been anonymous.

For reasons discussed by the Ectomorph, it is unwise to get in a legal battle with the appellate court of last resort.

Surely, there's no reason anyone should ever know how really important decisions get made. How did we lose Sunday shopping or legal restrictions on abortion? What happened with patriation anyway? It's none of your damn business.

Scalia and Binnie had a set-to on originalism at some forgotten conference half a decade ago. It can be found in (2004), 23 S.C.L.R. (2d).

Binnie acknowledges a heavy debt to his clerk, Patricia McMahon, an academic historian, and I don't think he was just being overly generous.

For the most part, it is reasonably sensible and just rejects a cartoon "original intent" school that no serious person supports anymore anyway. Binnie says he can see merit in Scalia's more sophisticated original semantic meaning views. He points out that nineteenth century courts did not look with favour on extrinsic evidence of what politicians thought they were doing when they enacted statutes, including the BNA Act, but of course Scalia hates that more than anybody.

Binnie notes that originalism has played a big role in the Canadian courts' interpretation of education rights and s. 96 (which constitutes the federally-appointed superior courts).

An originalism that is just about linguistic change won't have much effect on interpretations of a document written in 1982. The only significant change since then is that "sex" now just refers to the act and we would no doubt use "gender" in section 15 if it were written today.

Binnie's defence of the Motor Vehicle Act Reference is no good, though. (Perhaps in another post I'll say why._

Everyone thinks that people that agree with them or are otherwise like them are more moral than people who disagree with them or are different. That's natural selection, baby.

Still, we can sort of distinguish between the goody-two-shoes in politics and those with a more direct connection to the dark lord. LBJ and Richard Nixon have their defenders: by any reasonable account, LBJ was the most successful liberal president other than FDR. But even their staunchest supporters would be unsurprised to find out they were on the wrong side of judgment day. Joe Clark and Brian Mulroney had basically the same politics, and Mulroney was certainly more successful, but if Mulroney told you what time it was, you'd double check.

Marnie asserted that in 2008, Americans were looking for someone more moral as President than GWB, and that Obama has disappointed them. Anyone who had illusions that Obama was something other than a successful Chicago machine politician because of his professorial demeanour and talents was mistaken. Obama's a calculating pol, which he has shown in his realist response to the Iranian fracas.

But were Americans looking for something else? Something more idealistic?

I doubt it.

Let's start with his base. Obama was the perfect embodiment of the McGovern coalition of high-status highly-educated cosmopolitan whites and racial/ethnic minorities. Did they love him because he was moralistic? No, they supported him because he was one of them

Next he won over the partisan liberals (the "Kossacks") who were initially attracted by John Edwards. This is one of the most tribalist groups in American society, for whom procedural scruples are the clearest sign of weakness of character. They were suspicious of his talk of bipartisanship and his professorial approach to ideas he disagrees with, but eventually decided he was the best they were going to get. THEY weren't looking for Jimmy Carter.

But Obama didn't get the whole of the Democratic coalition. In fact, as we may dimly recall, he had a rough ride in the second half of the primary contest. Was that because the other half of the Democratic coalition were looking for greater morality in public life? No, it was because HRC was able to make the white working-class part of the Democratic coalition wonder if this guy had the stones to fight for them.

So in the Democratic primary, no one was looking for idealism and niceness, and in fact the reputation for such characteristics was a liability.

What about the general election? "Yes, we can" and all that crap?

I seriously doubt that anyone not actually enrolled in a liberal arts university bought any of that. Again, it was a liability for Obama that he was putting that "inspirational" stuff forward. However, McCain was not able to capitalize as well as Ms. Clinton, because his Senatorial self-regard is tied up with his image of himself as above the partisan fray. His policy positions are pure moralism. So Obama was able to persuade people that he was old and crazy, and that his vice-presidential nominee was dumb and crazier, and won.

While recognizing the potential effect of individual experiences on perception, Judge Cedarbaum nevertheless believes that judges must transcend their personal sympathies and prejudices and aspire to achieve a greater degree of fairness and integrity based on the reason of law. Although I agree with and attempt to work toward Judge Cedarbaum's aspiration, I wonder whether achieving that goal is possible in all or even in most cases.

That seems like a claim that differences in gender and ethnic background explain at least half the variance in decision-making, in other words to an r-sqaured of greater than .5. But she rests it on a mere finding of statistical significance in a minority of cases:

The Judicature Journal has at least two excellent studies on how women on the courts of appeal and state supreme courts have tended to vote more often than their male counterpart to uphold women's claims in sex discrimination cases and criminal defendants' claims in search and seizure cases.

Wednesday, June 03, 2009

Whether born from experience or inherent physiological or cultural differences, a possibility I abhor less or discount less than my colleague Judge Cedarbaum, our gender and national origins may and will make a difference in our judging.

"Possibility" must refer only to "inherent physiological or cultural differences", because it occurs in the parenthetical phrase, and the main clause asserts that "our gender and national origins may and will make a difference in our judging."

So it follows that she is *asserting* that gender and national origins make a difference, and not just a difference in plumbing or choice of bathroom, but "in our judging." She is further asserting that this is caused *at least* by differences in life experience, but possibly by other factors.

She is not asserting that this difference is caused by inherent phsyiological or cultural differences, but she is asserting that (a) it's possible and (b) she doesn't abhor or discount the possibility.

She may be limiting the possibility of "inherent physiological" differences influencing judgement to gender, while entertaining "cultural" differences in relation to national origin. This is plausible both because the prospect of inherent physiological ethnic differences affecting judges is highly politically incorrect, and because she doubtless knows that "Latina" is a cultural and not racial descriptor.

Free trade within British North America was definitely one of the objectives of Confederation, and it was motivated largely by the loss of the Reciprocity Treaty at the hands of the protectionist and anti-British Republicans. See both the federal "trade and commerce" power in section 91 of the BNA Act and the words of s. 121, "All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces."

"National treatment" and "most favoured nation status" are non-discrimination principles. Goods produced and services supplied from other countries should neither get worse nor better treatment than those produced and supplied in your own. That's the basic norm of international trade law. It is also enforced between the American states by the courts under the "dormant commerce clause." Unfortunately, it has relatively little (but not zero) support in Canadian constitutional law.

Barry Weingast defines the requirements of growth-inducing federalism as fourfold:

F1. Hierarcy There exists a hierarcy of governments with a delineated scope of authority. (Ideally, Lord Atkin's watertight compartments.)

F2. Subnational autonomy. Do the subnational governments have primary authority over public goods and service provision for their territories? (The subsidiarity principle.

F3. Common market. Does the national government provide for and police a common market that allows factor and product mobility?

F5. Institutionalized authority. Is the allocation of political authority institutionalized or within the sole control of one of the levels of government?

When you get all five of these, federalism promotes effective government and economic growth. When you don't, it doesn't.

Interestingly, Canada was really only able to maintain all 5 of these conditions when its federation was policed from outside, i.e., by the Privy Council. Since we let the final decisions be made by a branch of the federal government, all 5 of them have declined.

It has since been clarified that Judge Sotomayor misspoke. She was not claiming that Latina judges are in every respect better than crusty white guys, but only that diversity creates better decision making.

There's no doubt that Presidents deciding on Supreme Court justices have always considered diversity. In the nineteenth century, it was mostly just regional diversity. In the twentieth century, there developed a Catholic, a Jewish and then a black seat on the court. In Canada, we have of course always required three judges familiar with Quebec's civil code, and everyone would like to have an aboriginal nominee with passable credentials. These things are political reality, and there is no sense of "merit" such that it could always and everywhere trump it. Anyway, Judge Sotomayor seems to have the qualifications, along with a moderate and somewhat unpredictable judicial record.

So do the liberals win this argument? No, because the very point they rely on undermines the case for strong judicial review.

There is indeed some evidence that group decision-making is improved when those involved are relatively diverse, and therefore less inclined to groupthink. However, that fact isn't necessarily good for judicial liberalism, as we have come to understand it. No matter what their race and gender, appellate justices are necessarily an undiverse bunch. They have all been indoctrinated in the folk ways of a single profession. They are all in the top decile of intelligence, with extreme workaholic tendencies and bourgeois lifestyles. They live in Ottawa or Washington. They are bowed and scraped to all day by soft-spoken advocates and keener clerks. They almost never encounter the results of their decisions, with the principal feedback they get coming from other judges and law review articles written by people with less life experience than they have.

I'm not one to glamourize either politicians or voters, but they are a more diverse bunch. If diversity's so great, maybe we should leave the big decisions to them

Friday, May 29, 2009

The Obama Administration and Harper Government are exploring a deal where the US would drop the "Buy American" provisions of the stimulus package in return for provincial governments dropping their own local preferences in government procurement.

Stockwell Day is consulting with the provinces, and says he won't do anything unless "most" of them agree.

Constitutionally, I think there is a decent argument that the Feds could pass a law requiring "national treatment" and "most favoured nation" status on provincial procurement rules. In the Inflation Reference, the Supreme Court upheld wage controls affecting the provincial public service. It is widely accepted that valid federal legislation can bind the Crown in right of a province.

The Inflation Reference upheld the federal law on the dubious grounds that 1970s-era inflation was an "emergency" akin to the world wars. But there's a better case that a principled-based law imposing on provincial governments the general requirements of international trade agreements (especially national treatment and most favoured "nation" status) would be wholly constitutional. Indeed, it's hard to see why you would have a federation if you don't have free trade within it.

Monday, May 25, 2009

1. We have a tax, the payroll tax, that is (a) regressive and (b) punishes employment.

2. We have a benefit, the social security benefit, which is also regressive, and which reduces saving.

3. The first brings in a lot more revenue than the second expends, and will continue to do so for a few decades. However, there is really no connection between the two.

4. We pretend that fact 3 means there is a "trust fund", but really there is just an accounting fiction within the books of the US Government, said books vastly in deficit overall.

Official Pith & Substance position:

1. This tax should be killed before any other tax. In a perfect world, the US Government would get the additional revenue (and enough to deal with the inevitable Bush/Obama deficits) from a national VAT.

2. This benefit should be kept at its current level. However, it should not be allowed to grow at the rate of the economy as a whole. Instead, government policy should "nudge" people into putting money in defined contribution plans, thereby increasing saving.

3&4. We should stop pretending there is a trust fund, since there is not, in fact, a trust fund.

Saturday, May 23, 2009

Returning to the depressing theme of whether conservatism is played out, there is a good article by Richard Gamble on the ambiguous legacy of Ronald Reagan. There's a sense* in which conservatism needs to get in touch with its inner Jimmy Carter. It needs to emphasize limits, imperfectibility and original sin.

Monday, May 11, 2009

We had a bit of a debate a few months back about which of the right or left is in greater need of intellectual revitalization. My two cents: inside the US, the right has become sectarian and doctrinaire -- elsewhere, it may still be the case that the left knows less about how its enemies think and is therefore dumber.

A rather more authoritative voice than mine has spoken. According to Richard Posner:

The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of management and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.

By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.

Monday, April 13, 2009

Those of us unenthused by super-empowered appellate courts under a system of judicial review are also bound to wonder about independent central banks.

We especially have to worry if they aren't going to just target some low, stable rate of inflation, but are going to have massive discretion to stop asset bubbles in their tracks and rebuild entire economies after they blow up. That's a lot of power, and I have no real reason (other than lack of professional competence to second guess them) to think they'll use it any more wisely than the Red Nine do.

Which is why I hope that Scott Sumner is right that targeting nominal GDP is a good idea. It seems like a simple rule. Instead of trying to hold inflation constant, you try to hold inflation plus growth constant. In the long run, you get the same amount of inflation. In the shorter run, you should be able to cut back on bubbles (in higher-than-normal growth) and recessions (in lower-than-normal growth).

Moreover, Sumner argues that the central bank could tap the market for forecasts about nominal GDP (the same trick could work for inflation).

If both tricks work, there'd be a discretion-less but depoliticized central bank.

If only we could do the same for the Red Nine.

Update: Much excitement about Austrian Business Cycle theory in the comments. Normally, I don't get into arguments with creationists, Spartacists or goldbugs -- I prefer rational discourse with yogic flyers and Mormons. John Quiggin has an interesting post on the original, not-so-crazy theory here.

Tuesday, March 24, 2009

The Lawyer's Weekly (story is not online) reports that the Federal Department of Justice will link manager's pay to the number of lawyers they get from visible minorities and "other designated groups", although the ADM in charge, Donna Miller, admits that there is no actual lack of population representativeness in the DOJ. This would never happen if Stephen Harper were Prime Minister.

The problem is that these lawyers lack an adequate sense of grievance. As Ms. Miller puts it:

Miller said DOJ is actively working to promote racialized lawyers.

The article helpfully notes that the contracts for diversity training will be quite lucrative. Any Pith & Substance readers with the appropriate credentials are advised to take advantage of this great opportunity.

It's hardly an original thought, but much of the American right in the age of Obama resembles the liberal-left in the era of Reagan. Back in those days, the conservative intellectual elite understood leftist arguments, while the left basically just assumed that conservatives must be stupid and evil. They could not really comprehend that their might be an argument on the other side, or that it could be adopted by someone who understood their own perspective and was not wholly malevolent. Right-wing intellectuals like Milton Friedman were the ones who were trying to shake their opponents into seeing things differently. They knew they'd win the argument if they could get a hearing. But even when they took power, they still couldn't be taken seriously. The Reagan/Thatcher revolution must just be a terrible burst of atavistic primitivism, rather than a rival set of ideas.

Obviously, there are still people like that on the left today, and there were unthinking partisans on the right back in 1980. But my sense is that today it is the right that talks to itself, and is blinded by its own certainty that it is always right. There are exceptions, but they tend to be moderates -- the kind who are easily praised by the New York Times.

Murray, as co-author of The Bell Curve and a bona fide movement neoconservative/libertarian, can hardly be accused of the same. In his March speech, he gave an uncompromising defence of fusionism and left no doubt that he expects advances in genetics to falsify left-wing assumptions about human equality. But he did so while making serious arguments and without pretending that mild social democracy and Stalinism are exactly the same. He does not pretend that Obama is Mugabe, but makes a fairly appealing argument against what Obama wants to do.

Murray's speech has two parts, and the division between them is, as Ross Douthat has noted, rather stark.

*In the first part, Murray makes a deep argument against European/Canadian-style social democracy and in favour of the Red State American model. Murray adopts Aristotle's idea that happiness (the good life) consists not in pleasure and the avoidance of pain, but in a life of "deep satisfactions" -- hard but important things:

I'm talking about the kinds of things that we look back upon when we reach old age and let us decide that we can be proud of who we have been and what we have done. Or not.

To become a source of deep satisfaction, a human activity has to meet some stringent requirements. It has to have been important (we don't get deep satisfaction from trivial things). You have to have put a lot of effort into it (hence the cliché "nothing worth having comes easily"). And you have to have been responsible for the consequences.

There aren't many activities in life that can satisfy those three requirements. Having been a good parent. That qualifies. A good marriage. That qualifies. Having been a good neighbor and good friend to those whose lives intersected with yours. That qualifies. And having been really good at something--good at something that drew the most from your abilities. That qualifies. Let me put it formally: If we ask what are the institutions through which human beings achieve deep satisfactions in life, the answer is that there are just four: family, community, vocation, and faith.

The most important objection to the European social democratic model is that it denies these four to huge swathes of people. The model citizen of Canada or the EU cohabits, but does not marry, and does not have children. S/he avoids atavistic attachments to tribal identity. S/he is probably a spiritual seeker or at least believes in UFOs and ghosts, but does not belong to a church. And if s/he does not have the skills to be a knowledge worker, s/he doesn't work at all.

Murray does not seem optimistic that the hard things will survive if there are easy ways to avoid them.

Last April I had occasion to speak in Zurich, where I made some of these same points. After the speech, a few of the twenty-something members of the audience approached and said plainly that the phrase "a life well-lived" did not have meaning for them. They were having a great time with their current sex partner and new BMW and the vacation home in Majorca, and saw no voids in their lives that needed filling.

In this part of the speech, "human nature" has a teleological meaning. It consists in proper ends for a human life, ends that can be lost sight of by whole cultures.

But in the next part of the speech, "human nature" gets a scientific, measurable, even positivistic meaning. He expects (undoubtedly correctly) major advances in the biological understanding of human psychology, and he expects it to refute core social-democratic premises. Women and men think differently about sex and babies. Intelligence and personality are largely determined by genes, and those genes are differently distributed in different partially reproductively-isolated human populations. Etc.

The difficulty is bringing these two conceptions of human nature into one frame. If the deep satisfactions are triggered by our biology as given through eons of natural selection, then it is hard to see how Barack Obama can seriously threaten them. On the other hand, it may be that wealthy twenty-somethings caring more for fast cars and loose sex partners than for the virtues is also coded in the genes, and was as familiar to Aristotle and Plato as it is to visiting professors in Zurich. To the extent social change is making this attitude more common, it is just the spread of wealth and education. Wealth makes it easier to avoid hard satisfactions, and the educated sensibility cannot just return to the naive faith without becoming an angry fundamentalism. In other words, if anything is at fault, it is capitalism (for generating the wealth) and the Enlightenment. In other words, it is a product of the same forces that will drive those advances in genetic science.

Saturday, March 14, 2009

If there are clearly identifiable villians in the sub-prime mortgage fiasco, it is the bond rating agencies. The idea of securitization is that the market can price and bear certain kinds of risk better than institutions. The Pithlord continues to believe that this is so, and therefore that securitization will rise again.

But the Pithlord's faith depends on honest intermediaries giving the straight goods about what the risks are. Moody's and Standard & Poor notoriously failed to do so. They didn't distinguish between diversifiable risk and non-diversifiable risk, and therefore gave collections of crappy mortgages much higher ratings than they deserved. And they were in a conflict-of-interest, since their revenues depended on sales. At the height of the bubble, the market was happy to be suckered.

One of the bolder libertarian contentions out there is that the world could do without the function that’s performed by the Consumer Products Safety Commission. After all, the logic goes, consumers want to buy safe goods. This means that producers want to be able to credibly signal the safety of their goods. That means that there ought to be, in a CPSC-free world, a market opportunity for a firms that rate the safety of consumer products. Toaster makers would hire toaster-inspectors, and ask them to give the toasters a clean bill of health. “That’s crazy,” you might say, “who would trust a toaster-rater who was getting paid by the toaster-makers?” But the answer is clear. A toaster-rating agency needs to have a strong, credible brand to be valuable to toaster-makers. Getting a seal of approval from a toaster-rating agency that’s known to cook the books in exchange for business would be worthless. So toaster-raters should stay honest, and those who aren’t honest should find themselves out of business.

Now as it happens, we don’t handle consumer product safety like that. But we do handle bond rating that way. But there are only three ratings agencies. And as it happens, during the late boom years all three acted corruptly. So instead of losing credibility and going out of business, all three are still in business. And when you think about it, something similar happened with the big accounting firms during the Enron bust.

Yglesias' account of the Enron scandal is a bit misguided - after all, Andersen did go broke as a direct result. This was pretty rough justice, since the Big Five were probably equally guilty, but it did have an effect on the other four. They leavened their 1990s-style "innovation" with a bit more risk aversion - at least for a few years.

So why was there nothing like the bankruptcy of Andersen as a result of the CDO debacle? Doesn't this genuinely create a problem for those of us who think markets usually work better than regulators?